New Delhi, Jan 6: It is learnt that about 40 lakh employees affiliated to over 2,500 private Provident Funds are facing threat of losing income tax benefits on their PF. The government now is having a second though over giving permanent recognition these private firms.
The Union Labour Ministry is not inclined to give final approval to these trusts following reports that privately-run PFs are violating investments accounting norms. Reports suggest that there are over 2,500 private PFs operational at present. But many operate under temporary recognition given by the Employees Provident Fund Organisation (EPFO). The temporary EPFO recognition enables them to qualify for tax exemptions.
However the Income Tax authorities have warned these privately-run PFs that the tax benefits of to their subscribers would be in trouble if they did not get a final approval from the Labour ministry.
Labour ministry sources said that several of these funds were not following the norms and was not maintaining the accounts as per the provisions of the Employee Provident Fund and Miscellaneous Provisions Act. Subscribers to the private PFs are allowed income tax exemptions under Section 17(1)-A of the IT Act.
Meanwhile the industry representatives pointed out the apathy on the Ministry in this respect.
They said that let the Ministry punish who do not abide by the law and norms, instead of denying recognition to all the privately-run PFs. They are also waiting to know will the clearance be given before the coming Budget session. The next session is, however, expected to be a vote-on-account where no new schemes of the government could be introduced.
OneIndia News (With inputs from Agencies)